04 Aug 5 of the Absolute Worst Ways to Structure a Sales Plan
Sales plans should motivate and inspire people to stretch, achieve, and grow but these 5 classic blunders will do just the opposite.
It doesn’t matter what business you’re in, sales is the single most important part of how you will grow. Yet, far too many founders and CEOs struggle with putting in place sales plans that correctly incentivize sales people. I’ve been there myself on innumerable occasions, from putting in place the sales plan for startups to multibillion-dollar global organizations. What’s uncanny is how amazingly similar the challenges are across that spectrum. Although the quotas and the complexities of a sale may differ dramatically, the pitfalls all seem to fall into five basic blunders.
If you’re already doing one or more of these, take heart because in my experience even the most tenured executives make these mistakes with every good intention but with potentially disastrous results. The key is spotting it fast and steering clear.
- Make it all about the quota. – You are not just setting a quota; accept that a sales plan conveys much more. It also sends out messages about the health of the business, ambitions about its potential, and most importantly attitudes about the way sales people–especially your top performers–are valued and appreciated. Quotas are critical, no argument there. But so is training, support, and living up to customer promises.
The Right Thing To Do: Acknowledge the support your sales force needs by investing in it. Great sales people have amazing integrity and want to be equipped to do the best they can for their customers. Acknowledging that means talking about much more than just the quota and including how you will help them achieve their goals.
- Don’t consult your sales people. – I’ve seen too many cases where a sales plan is handed down with little or no explanation. The reaction is always one of dismay and potentially disgust. The attitude is very simply, “Why didn’t they consult us first?” The response from execs I talk to is that sales people would pad the numbers or try to game the system. Really? That’s the amount of faith you have in your sales force? Because that’s exactly the message you’re conveying.
The Right Thing To DO: Have the conversation with sales. Be bold enough to ask them what kind of plan they would like to see. Negotiate something that makes sense by being transparent about objectives and expectations. If any of this scares the daylights out of you I can virtually guarantee that your also falling into the next two blunders.
- Increase the quota until you get pushback.–This is a close corollary to blunder #2, but in some ways even worse because now your saying, “I really don’t care what you think.” This tactic reminds Star Trek when Captain Kirk would order Scotty, in the engine room, to go to warp 9 while the engines are were barely putsing along on impulse power. Scotty’s response was always, “Captain, I don’t think she can take it!” Kirk would insist, and, of course, the Enterprise would perform. We all want to believe that we can will our way to greater sales but in real life it doesn’t play out that way.
The Right Thing To DO: Treat sales people like investors. If you are going to increase quotas provide a rational to your sales people that is not unlike what you might provide an investor. Get them to buy into the greater opportunity. Show them that the upside is really there. If they get excited by the prospects for growth it will translate into more sales.
- Get sales people to self-police sharing of quotas.–This one has to be the most ridiculous and yet most often attempted way to deal with a collaborative sales force. For example, your inside sales organization is working with outside sales in tight collaboration and you ask your outside sales people to allocate a set or adjustable percentage of their actual sale to inside sales people. This is just a recipe for disaster and it’s just plain lazy. Getting two sales people to agree on an equitable split based on their perception of who contributed and in what percentage is abdicating all responsibility and creates ongoing overhead that will haunt you on a daily basis. Most often these sorts of plans are crafted by accountants who are trying to minimize sales costs by avoiding double counting. Accountants have a genetic aversion to double counting anything. But that’s exactly what you need to do.
The Right Thing To DO: Give both credit and compensate them differently.
- Cap the plan.–OK, I said the last blunder was the most ridiculous, I take that back, blunders #4 and #5 are pretty much in a dead heat when it comes to WTF moments in sales plans. The conversation goes something like this. “What if our best sales person, Ms. M, blows the plan out of the water? She might end up making more than a VP or the CEO!” To which my response is, “And what exactly is the problem again?” Nothing is more motivational than the potential for unlimited upside. If you find yourself in this scenario you or your exec team need to consider what your real fear is and why you’re undervaluing your sales force’s contribution to the business.
The Right Thing To Do: Make blowing the plan out a stretch goal but don’t cap it. And, BTW, when someone does blow the plan out you now have a role model that everyone wants to emulate. There is no greater motivator!
Clearly there is much more to putting a sales plan in place but if you find yourself staring at any of these five blunders stop fast and consider what it is that you’re trying to achieve, the message you’re sending out, and the impact it will have on your sales force as well as your company’s growth.
Do you have your own blunders to add to this list? Leave a comment about your experience and challenges in either creating or working with a sales plan.
Tom Koulopoulos is the author of ten books and founder of the Delphi Group, a 25-year-old Boston-based think tank and a past Inc 500 company, which focuses on innovation and the future of business. He is also an adjunct professor at the Boston University Graduate School of Management, an Executive in Residence at Bentley University, the past Executive Director of the Babson College Center for Business Innovation, and a frequent keynote speaker. The late Peter Drucker once said of his writing, that it challenges not only the way you run your business but the way you run yourself. Tom’s latest book is The Gen Z Effect: The Six Forces Shaping The Future of Business.
This post was originally published on Inc.com.
The opinions expressed herein or statements made in the above column are solely those of the author and do not necessarily reflect the views of WTN Media LLC.